What are pre foreclosure homes?

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Pre foreclosure homes are properties that are in the early stages of the foreclosure process. These homes are usually available for sale before they are officially foreclosed upon and repossessed by the lender. In this article, we will explore what pre foreclosure homes are, how they differ from other types of foreclosures, and the potential benefits and risks of purchasing a pre foreclosure property.

Understanding Pre Foreclosure Homes

Definition: Pre foreclosure homes are properties that have entered the foreclosure process but have not yet been repossessed by the lender. This stage occurs when the homeowner has fallen behind on their mortgage payments and the lender has initiated the foreclosure proceedings. During this time, the homeowner still has the opportunity to sell the property and pay off the outstanding mortgage balance to avoid foreclosure.

Notice of Default: The pre foreclosure period begins with the issuance of a Notice of Default (NOD) by the lender. This legal document informs the homeowner that they are in default on their mortgage and gives them a specified period, usually 90 days, to bring the loan current. If the homeowner fails to do so, the foreclosure process will continue.

Opportunity for Homeowners: Pre foreclosure homes present an opportunity for homeowners to sell their property and avoid the negative consequences of foreclosure. By selling the home during the pre foreclosure stage, homeowners can potentially pay off their mortgage and any associated fees, preventing further damage to their credit score.

Benefits of Purchasing Pre Foreclosure Homes

Potential Bargains: One of the primary benefits of purchasing a pre foreclosure home is the potential for a bargain. Since the homeowner is motivated to sell in order to avoid foreclosure, they may be willing to accept a lower price than market value. This can provide buyers with an opportunity to purchase a property at a discounted price.

Less Competition: Pre foreclosure homes are typically not listed on the open market, which means there is often less competition from other buyers. This can give potential buyers an advantage in negotiating a favorable deal.

Opportunity for Renovation: Pre foreclosure homes may require some repairs or renovations, which can deter some buyers. However, for those willing to invest in the necessary improvements, there is an opportunity to add value to the property and potentially increase its resale value.

Risks of Purchasing Pre Foreclosure Homes

Uncertain Condition: Since pre foreclosure homes are often sold as-is, buyers may have limited information about the condition of the property. It is important to conduct a thorough inspection or assessment before purchasing to identify any potential issues or hidden costs.

Delays and Complications: The pre foreclosure process can be complex and time-consuming. There may be legal hurdles or delays that can prolong the purchase process. Buyers should be prepared for potential complications and ensure they have a thorough understanding of the legal requirements and timelines involved.

Emotional Considerations: Purchasing a pre foreclosure home involves dealing with homeowners who may be experiencing financial distress. This can lead to emotional negotiations and potential challenges in the buying process. Buyers should approach these situations with empathy and patience.


Pre foreclosure homes offer potential opportunities for buyers to purchase properties at a discounted price. However, it is important to carefully consider the risks involved and conduct thorough due diligence before making a purchase. Understanding the pre foreclosure process, conducting inspections, and being prepared for potential complications are crucial steps for buyers interested in purchasing pre foreclosure homes.


– Investopedia: www.investopedia.com
– Bankrate: www.bankrate.com
– Zillow: www.zillow.com